Why VW’s agencies are hoping it re-enters marketing arena sooner than later

Volkswagen has reported a pre-tax loss of €2.5bn in the third quarter after it set aside €6.7bn to cover (it hopes) the cost of the diesel emissions scandal. This is its first quarterly loss in 15 years. Sales dropped 3.7 per cent but the German car giant still made an operating profit of £3.2bn.

VW recently lost its crown as the world’s biggest car maker to Toyota, just to create more joy in Wolfsburg.

The third quarter numbers were not as bad as expected though and the shares rose four per cent immediately after the announcement.

The full extent of VW’s travails has yet to be computed and there will almost certainly be more write-offs, possibly lasting years. Neither has the collateral damage among its agencies and other suppliers as the embattled firm has cancelled its ads.

IPG’s Deutsch LA will be taking a hit in the US as will Omnicom’s DDB network in Europe. It’s a particular poser for the UK’s adam&eveDDB where A&E’s James Murphy, David Golding, Ben Priest and Jon Forsyth (and some senior staff maybe) are awaiting the results of their earn-out from DDB and Omnicom. This has been put at £60m although we understand the deal was not limited.

But, depending on how the deal was structured, the loss of VW income as the company cuts back its UK ads and many online activities could hit hard. VW income could equate to a year’s profit

A&E will be hoping that VW comes out fighting on the ad front some time soon, judging that the company’s image has not been as badly trashed as it initially feared and that investing in marketing is likely to be more productive than hoarding cash.

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